Opinion

Jack Shafer

Dear Mr. Murdoch: Save yourself 80 billion bucks

Jack Shafer
Jul 17, 2014 21:59 UTC

News Corporation CEO Rupert Murdoch waits to testify before the House Immigration, Citizenship, Refugees, Border Security and International Law Subcommittee on Capitol Hill in Washington

The first time Rupert Murdoch tried to acquire Warner, Ronald Reagan was completing his first term as president, the Bell System break-up was nearly finished, and the first Macintosh had just gone on sale.

Murdoch’s aim was to construct an entertainment-information conglomerate on top of his existing newspaper properties. When Warner (or Warner Communications, as the parent company was called then) spurned his 1984 offer, he promptly went on to purchase 20th Century Fox as his bedrock and from that base built an international company that includes a American broadcast network, 28 terrestrial U.S. television stations, several satellite broadcasting entities, a profusion of cable television channels, an immensely profitable news network, and more.

Thirty years later, the 83-year-old Murdoch is throwing $80 billion at TimeWarner, which recently shed its print properties, for a new reason. Having exceeded his infotainment empire goals, Murdoch still needs to expand his business to compete with other jumbo-sized media conglomerates, such as the No. 1 revenue-generating conglomerate, Comcast — which owns NBC and Universal, and has a bid pending regulatory approval for Time Warner (no relation anymore) Cable — and No. 2 conglomerate Disney, which owns a line-up of properties similar to that of Murdoch. If Murdoch’s No. 4 conglomerate, 21st Century Fox, succeeded in swallowing No. 3, TimeWarner, it would become the new No. 2.

Getting bigger for bigness’s sake makes sense for a sumo wrestler. But does that apply to a media conglomerate?

Although Fox’s proposed purchase of TimeWarner sounds like a film-studio deal, the film units are secondary at both companies, with cable networks producing the greatest revenues at both — and Disney and Viacom as well. The screen at home eclipsed the screen at the multiplex long ago, and is still growing, which is a main reason Murdoch covets TimeWarner’s cable channels (HBO, TBS, TNT) which out-earn those of the other media conglomerates.

The timeless appeal of Vice Media

Jack Shafer
Jun 25, 2014 15:21 UTC

North Korean leader Kim Jong Un watches a basketball game between former U.S. NBA basketball players and North Korean players of the Hwaebul team of the DPRK with Dennis Rodman at Pyongyang Indoor Stadium

The kings of capitalism keep rewarding the imps at Vice Media for their transgressions against societal and media norms with rising market valuations. Starting with a wee, free counter-culture magazine in Montreal in 1994, the ageless boys behind Vice soon barnstormed Canada with their title and by 1999 were international and ensconced in New York.

Peddling outré features such as the “Vice Guide to Surviving in Prison,” “A Brief History of the Dildo,” and “Held Hostage in Burma by Teenagers,” Vice has warmed the blood of its young male readership with the hardboiled and sensational in print, online and video. Back in 2000, the Montreal Gazette pegged the rising magazine’s worth at $500,000 and the whole operation, online included, at $4 million.

Not long before the dotcom bubble ruptured, Vice Media co-founder, chief executive officer, and lead transgressor Shane Smith speculated that his company’s worth had grown to $40 million. In 2007, Smith revised the value of his burgeoning multimedia-conglomerate to “a shitpile,” and from that compost the company’s worth has ballooned. It was likely worth $1 billion, said Forbes in 2012, and this week the New York Times reckons it stands somewhere between $1.5 billion and $2.5 billion.

Shameless paper in mindless fog

Jack Shafer
Apr 18, 2013 23:02 UTC

If our culture allowed diseased newspapers to be quarantined, I’d have the New York Post kenneled right now.

I express that sentiment after reading the Post‘s Boston Marathon bombing coverage, in which it erroneously reported that 12 were dead, mistakenly stated that a Saudi national was “a suspect in the Boston Marathon bombing” and, this morning identified two Boston Marathon bystanders in a Page One photo as “Bag Men.”

Of course, every news outlet botches a breaking news story from time to time, and many have erred in their Boston reporting, as BuzzFeedChart GirlPoynterSalon and others have tabulated. But what distinguishes the New York Post from other stumbling outlets is the cavalier manner about its errors. When other outlets make monumental mistakes, they may take their time printing corrections. They may avoid acknowledging their errors if they can get away with it. Or if they acknowledge their errors promptly — as CNN’s John King did this week — they may blame “confusion” or “misinformation” rather than accept the blame directly. But by and large, the press takes its lumps.

The Daily didn’t fail–Rupert gave up

Jack Shafer
Dec 3, 2012 22:15 UTC

When you’re as wealthy as Rupert Murdoch ($9.4 billion) and you control a company as resource-rich as News Corp (market cap $58.1 billion), shuttering a 22-month-old business like The Daily doesn’t signify failure as much as it does surrender.

Murdoch knew what he was getting into when he launched the iPad-only (and then smartphone, Android tablet, and Kindle Fire) publication in February 2011. At a press conference, the mogul claimed to have invested $30 million pre-launch and assumed running costs of about $500,000 a week. According to a report in the New York Observer, attributed to a “source,” the operation was amassing annual losses of $30 million. But again, for someone like Murdoch, $30 million is chump change. His New York Post loses up to $70 million a year, according to some accounts, and you don’t see him closing it. Such losses are rounding errors in the company’s entertainment budget.

To place The Daily venture in scale, the last attempt to start a national, general-interest print newspaper from the ground up—USA Today—lost $600 million over the course of a decade before turning its first profit in 1994. (In today’s money, that’s more than $1 billion.) The National, the national sports daily, lost $150 million (about $250 million, corrected for inflation) in 18 months before closing in June 1991. In the late 1990s, when Murdoch was trying to crash the China satellite TV market, he had invested $2 billion and was losing $2 million a week according to his former right-hand man in that enterprise. So, please, let’s not obsess too much over Murdoch’s squandering of $30 million a year on a failed experiment. In the history of journalistic bets, this was a trivial gamble.

Britain’s press needs more freedom, not more regulation

Jack Shafer
Nov 30, 2012 00:20 UTC

The Leveson inquiry completed its 17-month official investigation into the filth and the fury of the British press today, pulling into the Queen Elizabeth II Conference Center opposite Westminster Abbey. There, its leader, Lord Justice (Brian) Leveson, delivered the inquiry’s 1,987-page report on the London newspaper phone-hacking scandals, wild invasions of privacy by the press and covert surveillance by newspapers, and recommended new regulations of the press.

The regime proposed by Leveson would replace the current — and toothless — self-regulation by the Press Complaints Commission with a body that would possess investigatory powers and authority to levy fines of up to £1 million for transgressors. The new body would be “voluntary,” funded by newspaper membership fees, as the 56-page executive summary explains, and “independent” of the press and government, though governed by statute. The advantage of submitting to the invitation to volunteer would be an “arbitration” service that would reduce the legal awards newspapers would have to pay when complainants brought their libel and invasion of privacy charges to the new body rather than to the courts.

Anticipating that some publications — namely the tabloids that routinely hacked phones, harassed people, co-opted the police, and published damaging lies — would refuse to volunteer, the summary recommends that those outliers be conscripted by the government’s broadcast overseer, Ofcom, which would operate as a “backstop regulator.” So there’s nothing voluntary about the regulatory scheme Lord Justice Leveson proposes. It surveys the landscape that is the British press — an institution sufficiently demented that one of its organs, News of the World, hacked dead schoolgirl Milly Dowler’s mobile phone in pursuit of lewd headlines — and proclaims that all publications, be they guilty or innocent of the numerous offenses catalogued by Leveson, be subject to a new government-mandated order. With that nose under the tent, it wouldn’t be long until the entire camel was calling the place home.

The leadership lessons of Chairman Rupert

Jack Shafer
Jun 26, 2012 19:56 UTC

This piece originally appeared in Reuters Magazine.

Rupert Murdoch has endured more crises during his 80-plus years than Richard Nixon and Odysseus combined, so the CEO and chairman of News Corporation can be forgiven for seeming nonplussed by his current predicament. He took over the family newspaper business in Australia at 21, when his father died, and expanded it. He fought the British unions in 1986 and won. He repelled the bankers in 1990, when he was close to insolvency. He has survived two divorces, the purchase and sale of MySpace.com, a bunch of other digital disasters, and even the predations of John Malone, who threatens Murdoch family hegemony with his purchase of News Corp stock. And now, referencing his media empire’s latest fiasco, the British Parliament has deemed Murdoch “not a fit person” to run an international company.

If Murdoch were the sort of pompous captain of industry who collected leadership maxims, Look for Trouble would likely top his list. He craves competition, and has repeatedly bet his company on new ventures like 20th Century Fox, the Fox Network, NFL football and his satellite operations.

Most chief executives think rewarding stockholders is their primary job. Not Murdoch. The Murdoch family owns the controlling shares in the company, so the chairman can largely ignore Wall Street to pursue a strategy that stretches across decades, not quarters. Yes, he’s impulsive, but creatively so.

Rupert Murdoch’s escape act

Jack Shafer
May 1, 2012 21:49 UTC

The publication today of Parliament’s 121-page report (pdf) on phone hacking has the British press all but publishing obituaries for Rupert Murdoch. The report damns him for turning “a blind eye” to the scandal of phone hacking at his companies, News Corporation and News International.

Murdoch is not “a fit person to exercise the stewardship of a major international company,” the report concludes, leveling a hammer to the media baron’s head. As the Telegraph interprets this finding, BSkyB, the UK satellite broadcaster that Murdoch owns 39.1 percent of, is “vulnerable” to a challenge from the regulators at Ofcom. If the regulators applied their “fit and proper” test to BSkyB, they could cancel its broadcasting license, order News Corp. to reduce its holdings in the broadcaster and oust Rupert’s son James Murdoch from its board of directors. The BBC seconded the Telegraph‘s take, and the Telegraph and the Guardian speculate that the report will echo in the United States, triggering criminal prosecutions and unending damage to Murdoch’s corporate reputation here.

Murdoch’s corporate counterattack today states that News Corp. has “already confronted and … acted on the failings documented in the Report,” insisting that the company has righted all the wrongs. In a memo to his 50,000 employees, Murdoch remained defiant, minimizing corporate wrongdoing and maximizing the corrective measures his company has taken.

Who cares if Murdoch lobbied?

Jack Shafer
Apr 25, 2012 20:51 UTC

Pummel Rupert Murdoch and his minions all you want for News Corp.’s phone-hacking of celebrities and crime victims, its computer-hacking, its blagging, its bribing of police, its payments of hush money, its obstruction of justice, and its operation of what former British Prime Minister Gordon Brown once called a “criminal-media nexus.”

But spare me the feigned outrage excited by this week’s interrogations of Murdoch and his son James Murdoch by the Leveson Inquiry into press ethics and practices. The Guardian, the Telegraph and the New York Times, among others, appear to be appalled by news that the media baron lobbied the UK government aggressively so that he could expand his holdings in the tightly regulated satellite broadcaster BSkyB from 39.1 percent to 100 percent. The Times cites subpoenaed News Corp. emails released by Leveson to show a Murdoch lobbyist working “hand-in-glove” with the office of a government regulator.

Isn’t climbing into the skins of regulators the very definition of lobbying? That’s how I understand it. Hate Murdoch all you want, but if you’re invested in highly regulated businesses like BSkyB and you need government approval to invest deeper in the regulated business, then working “hand-in-glove” with the regulators is exactly what the situation calls for. Should the Murdochs have ignored the regulators as they attempted to increase their holdings in BSkyB? Of course not.

Intrigue in the house of Murdoch

Jack Shafer
Oct 19, 2011 21:54 UTC

New York Times reporter Jeremy W. Peters invests 2,400 words today in a Page One story delineating the “rift” between News Corp. CEO Rupert Murdoch and his son and heir apparent, News Corp. Chief Operating Officer James Murdoch.

If News Corp. were a normal company and Rupert Murdoch a normal father, readers might glean from this report that a real power struggle is going on for the future of the company. But News Corp. is not your normal company, Rupert is not your normal dad, and there really is no struggle going on for the future of the company, only a replay of the previous “rifts” that have opened between Rupert Murdoch and his two other children by his second wife Anna—Elisabeth and Lachlan. You see, Rupert sets his adult children up to smack them down.

The first of Rupert’s heirs apparent to suffer the public humiliation of a rift was Elisabeth. In 2000, when she was 31, she escaped the family business. A Guardian story from 2000 about her departure says she was “once tipped as a business successor to her father.” What rattled her was her father’s designation of Lachlan as the new heir apparent. The Guardian continues:

Murdoch’s latest scandal

Jack Shafer
Oct 12, 2011 22:48 UTC

Wall Street Journal Europe Publisher Andrew Langhoff resigned yesterday, but why?

A hard-to-comprehend story in today’s Wall Street Journal alleges that Langhoff transgressed by pressuring Wall Street Journal Europe reporters into covering an advertiser, consulting firm ELP, and by contractually promising that WSJE reporters would cover ELP in “special report” sections. (The tainted stories in question now carry a disclaimer.)

There’s a third dimension to the scandal, which the Wall Street Journal article soft-pedals. It turns out that bulk-sold, discounted copies of WSJE were sold to the same advertiser, ELP, to boost circulation. I defy any reader to cull the salient passages and find any evidence or hint of circulatory wrong-doing by the publication.

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